Tag: competency

Competency vs Capability Mindset: The Organisation

Posted on by simongterry in Learning

Design your organisation for the potential of its people and their capabilities, not the limits of an expertise.

I recently noticed that Capability or Competency? Mindsets matter was the second most read post on this blog. Part of the appeal of that post is that it addresses a critical shift in mindset for those grappling with the new dynamics of the future of work. We stand facing an organisational version of the personal insight Marshall Goldsmith described succinctly as “What Got Me Here Won’t Get Me There”

Competency-led Organisations

The Core Competency concept introduced by Prahalad and Hamel refined a concept that had been strong in management for decades. It is undoubtedly true that organisations compete by being better, more competent, at something than their competitors. However the mindset of being more competent differs from a competency. This subtlety was often lost as core competency flowed into the mainstream of management thinking.

The focus on core competencies created a mindset that organisation gets to choose its competencies as part of a strategic planning process and should set targets for competencies to fulfil its strategy.  While Prahalad and Hamel spoke of the need for organisations to look forward to assess and build their competencies, much of the focus in organisations has been historical. The biggest outcome of the discussion of core competency has been a narrowing of organisational ambition and a focusing of activity on historical strengths. “That’s not our core competency” is more common than “We can leverage core competencies”.

Influenced by themes that go back to the beginning of scientific management, we have turned core competencies into rigid processes, standards and policies. We have judged these competencies by what sustained competitive advantage in past markets. We have spent less time on the changing customer perceptions of value and the ongoing dynamics of the future marketplace driven by new competitors. The list is long of disrupted organisations who felt safe because a new entrant lacked their core competencies. In many cases the infrastructure to reinforce and sustain these core competencies became a burden in their ability to adapt and survive. 

Capability-led Organisations

The Big Learning mindset that pervades the future of work highlights that competitive advantage in the next century is based on the ability to build the capabilities required to compete in an environment of uncertainty. Rather than specifying a fixed goal of competency, we seek to build an open capability to fulfil our strategic intent and our customers’ needs as they arise.

Adapting organisations to foster autonomy, learning and change is what enables people to build the practical capabilities necessary to learn, grow and execute. The process you inherit is less important than the customer insight you gain in working to meet your customer needs. Prahalad and Hamel reinforced that in Competing for the Future their update of the core competencies discussion. The discussion on the need for organisations to build open capabilities that can help manage and drive adaptation.  These capabilities include openness to their networks and environment, collaboration, ability to learn, share and drive change. Critical too is the development of purpose as the new focus for organisational activity and the inherent rationale for groups of people to come together in work to benefit others.

Design for Capabilities

Responsive Organisations need to design for a capability-led response to a uncertain future. They need to develop core Big Learning practices like working out loud, personal knowledge management, adaptive leadership and experimentation. They need to design their organisations to allow individuals and the collective to focus on the realisation of purpose.

This organisational design will leverage networks, transparency, autonomy, experimentation and the inherent motivation of employees in ways that we have not yet seen. Developing a new competency in holocracy, agile, lean product development, design thinking, big data or any other single practice is not enough. An organisation must build the capability to continuously adapt to customer needs in a changing market.

Ultimately, it will also focus organisations more strongly on realising the potential of people, customers and other stakeholders. We need to design our organisations to build the capabilities that realise human potential. That can only help make work more human.

Competency or Capability? Mindsets Matter

Posted on by simongterry in Uncategorized

Competency and capability are near synonyms. However I find there is a world of difference in the mindset that lies behind each measure of individual development. The difference in mindset has major ramifications for careers, talent development and diversity. The two mindsets raise different questions when assessing individuals.

I have personal experience of the difference. When I have failed to win a role that I sought, the feedback is almost always framed in terms of lack of a demonstrated competency. However when I win new roles it is rarely because I had a demonstrated competency in the area of expertise that defined the role. My career has been based on bringing my set of capabilities to address the challenges and needs of each role.

Competency Mindsets vs Capability Mindsets

Discussions framed around competency are often conducted with a mindset of assessing an individual against a defined standard. Often competencies are defined quite specifically and related to limited areas of expertise. Compentencies are often seen as tools to enable someone to do a job. Competency assessment is much more likely to be oriented to formal qualifications, demonstrated prior experience or demonstration of specifically determined skills in action.  People seek to define a fixed goal for a skill relying heavily on past performance. Reaching competency is often seen as the end of the road for that skill. That mindset can be quite limiting in assessment & development of individuals.

Capability as a mindset should be focused on the ability to deliver an outcome, not a test score. Capabilites tend to be seen as infrastructure to achieve an outcome. This mindset tends to be more general, more open to allow more room for the application of other or similar skills and explicitly allows for a talented individual to prove a potential to show their ability in future.

Considering capabilities allows an individual to choose how to tackle at problems, roles or situations. Importantly, there is much less likely to be a defined limit to a capability which allows for the development of greater mastery over time.

Talent Development

A mindset of building competency in the development of talent often leaves the talent wondering why their career is not in their control. Talented people feel limited when pursuing competencies as a series of boxes to be ticked to progress to the next opportunity. There is little chance to skip ahead and prove the potential that made them talent in the first place.

Disruptive change also means that many narrow competencies individuals acquire can become rapidly irrelevant. At the very beginning of my career, I was quite proficient in the use of Wang messaging systems.  Thankfully my more general capabilities in communication supported my future career as email and now social technologies succeeded that now redundant system.

Focusing instead on the ability to achieve outcomes and building capability towards those outcomes gives the individual greater latitude to shape their career.  It also allows greater opportunity to demonstrate that ability in new or different roles that may not have the typical opportunity to show competency at a task.

Our Changing Future Demands Capability not Competency

In a rapidly changing world, defining the standard or even the actions required in a role in advance is challenging.  Organisations increasingly need to shift to outcome based performance measurement with less specific direction on tasks.  

The defined hierarchies that enabled graduated assessment of competencies and detailed command and control process management are proving more and more challenging to manage.  Flatter organisations are more focused on capabilities required to execute strategy.  Networked organisations help us see that the required capabilities+ may well exist in any part of the organisation’s network.  

We need people to bring diverse skills to solve new challenges and we need people to engage with their roles to build a continuous improvement in capabilities.  Allowing people the rewards of movement to mastery in any capability is critical to engagement.  

Merit: Think Capability, not Competency

Merit is a contentious issue in diversity. Often merit is used as an excuse for poor diversity outcomes. Merit can clearly influenced by conscious and unconscious bias. However, when discussing merit we are often unclear whether we mean merit considered on a competency or capability basis.  

Merit measured as competency tends to favour those who have had the opportunity to build prior knowledge and experience. Competency favours the usual suspects. Focusing instead on capability opens opportunities to consider new candidates and allows greater consideration of potential.

Any individual who has had limited opportunity to be fostered earlier in their career is likely to perform better in a mindset focused on their talent potential and ability to deliver, rather than prior experience or accrued skills.

Look Forward to Capability

The distinction between competency and capability is not one that is hard and fast. What this distinction does is open a new question in our decision making. Next time you are considering a role or a candidate reflect on whether there is a difference in your decisions if you look back to a competency or forward to capability.